PM Modi steps in to resolve dispute over Crop Insurance Scheme

Prime Minister Narendra Modi on Wednesday stepped in to sort out the dispute over the premium to be charged from farmers under the new Crop Insurance Scheme proposed to be launched this year as he held a meeting with ministerial colleagues over the sticky issue here.

At the two-hour-long meeting, Agriculture Minister Radha Mohan Singh made a presentation regarding various options of premium and the burden it will put on the national exchequer.

The ministry has proposed an average premium of upto 2.5% for foodgrain and oilseeds crops and 5% for horticulture crops. However, some sections within the Cabinet want a uniform premium of 1-1.5% for all crops.

The Centre would incur an expenditure of Rs 8,000 crore annually if a premium for farmers was fixed at 2.5 to 5% depending on the risky crops and if 50% of the total crop area of 194 million hectare was insured.

But fixing a uniform premium rate of 1.5% for all crops for 100% coverage would increase the Centre’s financial burden to Rs 11,000 crore, which the Finance Ministry officials said was a major concern.

“We made a presentation to the Prime Minister on the new crop insurance scheme. Besides premium rate, the discrepancies in the existing scheme was also discussed,” Agriculture Minister Radha Mohan Singh told PTI after the meeting.

He, however, did not disclose the outcome of the meeting, merely saying that the government aims to bring down the premium burden on farmers from the existing rate which is an average of 5.5%.

“We will address all the issues and take the proposal before the Cabinet at the earliest so that the scheme can be implement from the forthcoming kharif season from June,” Singh said.

The proposal on the new crop insurance scheme, moved by the Agriculture Ministry, was once discussed in a Cabinet meeting last year, but the decision was deferred in the wake of differences over the premium rate.

In the existing Modified National Agricultural Insurance Scheme (MNAIS), the average premium rate for farmers has been kept at 5.5%, though the premium rate for high risky crops is as high as 40%.

Last year, only 27% of the crop area was insured which cost Rs 3,150 crore to the national exchequer.